Charm In The Riverbend
14 May 2018
A Look at The Value that Investors See in the Riverbend
Bangkok has no shortage of choice when it comes to purchasing a condo for use or investment, but the riverside has always been a favourite for both buy for use and investors alike. People who work and live in downtown Bangkok often want a Central Business District (CBD) residence. With a city densely populated by people and concrete structures, many are looking for places they can connect with nature to be able to unwind around a more peaceful and natural setting which is a big reason that CBD luxury riverside residences have historically sold quickly and achieved good sale prices.
Not all riverfront properties are equally desired and owning on the riverfront does not guarantee a good investment. There is a portion of the Chao Phraya River that is especially well suited to buyers and investors of property now. This area of the Chao Phraya consists of both east and west sides of the riverbank, which includes Charoen Krung and Charoen Nakhorn roads, starting from the Phra Pok Klao Bridge through Taksin Bridge and down to the Bangkok Bridge.
The centre of activity is concentrated mostly around a two-kilometre stretch on the north side of Taksin Bridge. CBRE conducted surveys and focus groups with people who wanted to buy a downtown riverside residence and we found that Charoen Nakhon and Charoen Krung are the most popular riverside locations because of their proximity to CBD area. The strip from Taksin Bridge to the end of Charoen Nakhorn Road was weighted more prime from sample groups. On the east side, you find many world-renowned luxury hotels such as Shangri-La Hotel, Bangkok and Mandarin Oriental, Bangkok with River City Bangkok a little further down. On the west side, ICONSIAM shopping and lifestyle centre along with luxury residential projects are being developed and have been well received in the past 3-4 years. These new developments have taken up most of the remaining available real estate in this coveted bend of the Chao Phraya River. Namely, Magnolias Waterfront Residences IconSiam (sold out), The Residences at Mandarin Oriental, Bangkok (almost sold out), and recently Banyan Tree Residences Riverside Bangkok (already more than half sold out since opening in the 4th quarter of 2017). These projects are among the only projects where buyers will find a full waterfront view on this side of the river as the land plots were wide enough for developers to build them with river facing single load corridor design.
In 2013, the average asking price per square metre along the riverside was THB 157,750 per square metre; however, in 2014 that price shot up to THB 190,884. 2014 was also the year that Magnolias Waterfront Residences IconSiam launched with a price per square metre starting at around THB 230,000. This significantly lifted waterfront residence prices for new projects. In 2015, the price went up again to THB 238,446, which now exceeded even the most prime areas of CBD such as Central Lumpini area which had an average price of THB 230,958. And from 2015-2017, the price along the riverfront has achieved the highest average asking price in all of CBD Bangkok at THB321,750 beating its closest competitor which is Central Lumpini at THB 255,954 by a healthy margin. To note, there are outliers such as 98 Wireless which achieved over THB 550,000 in the Central Lumpini area, but it does not reflect the average achieved price. Equally important to note is that it is only around this specific bend in the river that has successfully achieved these sale prices, which supports that perception of this area is now considered prime in the minds of both investors and buy for use purchasers.
Considering the supply factor, supply of riverside land has always been limited especially in the luxury and super luxury grade because of rarity of prime riverside land with wide river frontage. CBRE expects that supply of prime riverside developments will remain limited in the next few years, especially in this popular location due to limited land availability.
The riverside has always had a relatively small number of new units launched as compared to most other areas of downtown Bangkok, where most of the activity is centred around Sukhumvit, Silom/Sathorn, Central Lumpini, and Pathumwan areas. Since 2012, the average number of units launched on the river side has been around 6% or less of total downtown condominium supply, high-end to luxury. The only exceptions were in 2014 and 2015 when Magnolias Waterfront Residences IconSiam was released in which the percentage rose to around 12% and 10% respectively. Since then the number has reduced back to around the 6% mark. Our current forecasts for the riverfront show limited to no new launches along the river front through 2021.
Another factor for investors to consider is that of the total number of units in one project should not be too dense; ideally, 350 units or less. Among river front condos that are available, there is an even smaller number of units available where the building design allows for all units to get a direct and unblocked river view. These projects have been more valuable resulting in higher appreciation rates over units with less prime views.
The area has become more focused with the development of high profile projects such as ICONSIAM, but even before that there has been lot of history surrounding the neighbourhood with temples and local markets which has become interesting tourist attractions. There has been new developments and F&B entrants in the area such as LHONG 1919. These elements make the area well established while still bringing the relaxing charm of the riverfront. Charoen Krung area has emerged as a tourist spot when Asiatique The Riverfront opened followed by Four Seasons Residences and Hotels mixed-use project currently in development.
There is both a Thai and foreign demand for riverside condominiums. The recent boom in tourism has exposed the area to a good target market of high net worth investors as many of these tourists stay at a five-star hotel along the river and visit the neighbouring areas.
For luxury projects to work, they generally require a superior blend of location, project design, local amenities, facilities, and accessibility. There are only unique locations such as this riverbend where all things come together to make the opportunities for creating a stable long-term luxury development. The limited available riverfront land in this area ensures that there will only be a limited amount of supply in the years to come which will increase the likelihood of value appreciation for projects in this area over time.
This is a special article written by Aliwassa Pathnadabutr, Managing Director of CBRE Thailand for Bangkok Post’s Spectrum dated 13 May 2018.